This tax season, I have had no fewer than three people ask me at what point do [fill in the blank: charitable deductions - or - self-employment expenses - or - losses from rental activities] trigger an IRS audit. Each time, the question took me by surprise. Now, maybe I’m naive, but it surprised me that people would think of their taxes in terms of how far can they push the envelope before the IRS starts asking questions. That’s not the way I think of taxes at all.
In my mind, I consider all legal tax deductions — and there are many — when preparing a client’s tax return. But dishonesty is not in my repertoire. Sure taxes are high (and living and owning a home in New York State, don’t I know that!) but that’s what we pay to live in our society. We get a lot back for it — good educations, good roads, police protection, welfare allowing us to keep beggars off the streets, health care for the elderly and indigent. It’s the price we pay to live here, and I don’t believe anyone should evade the responsibility of paying what they legitimately owe.
It must be awful to be a tax evader. They break out in a cold sweat when they see an IRS notice in the mail. Uh-oh, they think. But if you keep good, accurate records, and you are truthful on your tax return, you really have nothing to fear from the IRS.